A new pawnshop ordinance officially went into effect Feb. 22 in spite of a pending lawsuit from Pawn America and a protest from an existing shop's landlord.

Earlier this month, the City Council finalized an ordinance intended to ensure that pawnshops are located in large commercial areas away from neighborhoods.

The new ordinance prevents pawnshops from opening within 1,000 feet of another pawnshop, currency exchange, payday loan agency, gun shop, liquor store or sexually-oriented business, according to its test. Additionally, a pawnshop cannot be located within 350 feet of a residential area, school, religious institution, park, library or community center.

The ordinance provides several more restrictions on pawnshops, such as banning bars covering doors or windows and banning neon accents.

The issue arose after Pawn America sought to obtain a license to open a store at the Trestman Music Center, 5600 Excelsior Blvd. The city already has an ordinance limiting the number of pawnshops in the city to two. Pawn America had sought to obtain the second slot.

Numerous area neighbors turned out to protest the pawnshop during an October council meeting. Specifically, opponents claimed that a pawnshop would detract from their neighborhood's appearance, would bring additional traffic to their Elmwood neighborhood and could potentially lower property values.

Excel Pawn and Jewelry, the existing pawnshop, will be grandfathered in and can remain in the Texa-Tonka Shopping Center, said Community Development Director Kevin Locke. The store would not be affected unless it moved or expanded.

Nevertheless, Texa-Tonka managing partner Jeffrey Fine sent an e-mail last month to the mayor and members of the City Council protesting the ordinance.

In the e-mail, Fine argued, as Pawn America has in court, that the city enacted the ordinance in order to prevent Pawn America from opening in the city.

Fine asserted also that pawnshops provide a community service to moderate and low-income residents in the city, as do payday loan and check-cashing businesses.

He also took issue with a city study's conclusion that pawnshops are not neighborhood businesses, but rather draw from the region, as a reason to limit them to large commercial areas.

"That same description fits half the tenants in the Texa-Tonka Shopping Center area, those along Minnetonka Boulevard and those on Excelsior Boulevard west of Highway 100," Fine wrote.

He argued that pawnshops could be smaller, more neighborhood-oriented stores if the city allowed more than two of them. He also did not find convincing the Elmwood residents' arguments that Pawn America would bring more traffic to their residential area. If that's the case, he wrote, the government should not have created a highway interchange that brings commercial traffic near a residential neighborhood.

"This long memorandum is being written out of a certain sense of anger or frustration that the City seems poised on a course of action that is going to impact my property rights, the property rights of Excel Pawn & Jewelry, and for that matter, specifically the rights of Pawn America to engage in a legal, lawful business," Fine said.

Locke said the pawnshop study did not evaluate any specific pawnshop company or location and that Excel Pawn can remain in its present location indefinitely.

A Hennepin County District Court ruling last fall also supported the city's position when Judge Denise Reilly denied a Pawn America request for a temporary restraining order to stop an initial pawnshop moratorium.

Reilly stated in a 15-page ruling that Pawn America does not have a "vested right" in obtaining a pawnbroker license on a purchased site and does not face irreparable harm from the city's move. If harmed financially, the company has the opportunity to seek financial damages, but Reilly indicated skepticism that the company's lawsuit would succeed.

Relating to Pawn America's position that the city unfairly targeted the business, Reilly wrote that cities have the right to make zoning decisions reasonably related to the promotion of public health, safety or general welfare and that Pawn America bears the burden of showing that the city acted in bad faith or in a discriminatory manner.

The court has more recently mandated that Pawn America and the city participate in a mediation process.

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He argued that pawnshops could be smaller, more neighborhood-oriented stores if the city allowed more than two of them. He also did not find convincing the Elmwood residents' arguments that Pawn America would bring more traffic to their residential area. If that's the case, he wrote, the government should not have created a highway interchange that brings commercial traffic near a residential neighborhood.

"This long memorandum is being written out of a certain sense of anger or frustration that the City seems poised on a course of action that is going to impact my property rights, the property rights of Excel Pawn & Jewelry, and for that matter, specifically the rights of Pawn America to engage in a legal, lawful business," Fine said.

Locke said the pawnshop study did not evaluate any specific pawnshop company or location and that Excel Pawn can remain in its present location indefinitely.

A Hennepin County District Court ruling last fall also supported the city's position when Judge Denise Reilly denied a Pawn America request for a temporary restraining order to stop an initial pawnshop moratorium.

Reilly stated in a 15-page ruling that Pawn America does not have a "vested right" in obtaining a pawnbroker license on a purchased site and does not face irreparable harm from the city's move. If harmed financially, the company has the opportunity to seek financial damages, but Reilly indicated skepticism that the company's lawsuit would succeed.

Relating to Pawn America's position that the city unfairly targeted the business, Reilly wrote that cities have the right to make zoning decisions reasonably related to the promotion of public health, safety or general welfare and that Pawn America bears the burden of showing that the city acted in bad faith or in a discriminatory manner.

The court has more recently mandated that Pawn America and the city participate in a mediation process.

Comment on this story at our website, www.mnsun.com.